Bitcoin accounts for an alarming rate of global electricity production, 0.5%, despite more green alternatives being available, according to new research from ESCP Business School reveals.
Philip Mawusi Adiamah, MSc in Energy Management Student, found that the process of bringing new Bitcoin into circulation known as mining is extremely harmful for the environment due to the mechanism used to record transactions primarily.
However, there are some positive news in the industry, the second largest cryptocurrency, Ethereum is transitioning from the harmful Proof of Work mining mechanism to a most environmentally friendly Proof of Stake mechanism which will consume 99% less energy.
Bitcoin mining is at risk of damaging the environment due to the industry’s reliance on non-renewable energy sources, with the price of renewable energy sources, such as solar decreasing significantly in recent years, there is a huge market opportunity for environmentally friendly and sustainable bitcoin mining.
The findings suggest that the Chinese government’s banning of bitcoin mining has been beneficial to the industry, driving some of the world’s largest coal-powered mining farms to regions with vast renewable energy resources, like North America and Iceland.
“According to the University of Cambridge Centre for Alternative Finance’s Bitcoin Electricity Consumption Index (BECI), Bitcoin currently consumes close to 131.5 Terawatt Hours per year, accounting for 0.55% of global electricity consumption. This is roughly more than to the annual electricity consumption of Pakistan, the Netherlands and Sweden.” says Mr Adiamah.
“Bitcoin mining has the potential to accelerate the global energy transition to renewables.”
He suggests that by using renewable energy sources for mining, Bitcoin could lead the way in a new greener world.